Wishpond Technologies Ltd. (WISH) Earnings Call Transcript & Summary

Hi, and thank you, everyone, for joining us today, and welcome to Wishpond's 2022 Fiscal Third Quarter Financial Results Conference Call. My name is Angelica, joining me on the call today are Ali Tajskandar, Chairman and CEO of Wishpond; as well as David Pais, the company's CFO. This call is being recorded. We will be having a Question-and-Answer Session at the end of the call, which will be limited to analysts only. I just that everyone has received a copy of our financial results press release that was issued earlier today. Listeners are also encouraged to download a copy of our quarterly financial statements and management discussion and analysis from sedar.com. Please note portions of today's call, other than historical performance, include statements of forward-looking information within the meaning of applicable securities laws. These statements are made under the safe harbor provisions of those laws. Forward-looking statements involve known and unknown risks, uncertainties, assumptions and other factors, many of which are outside of Wishpond's control that may cause the actual results, performance or achievements to differ materially from the anticipated results, performance or achievements implied by such forward-looking statements. These factors are further outlined in today's press release and in our management discussion analysis. We provide forward-looking statements solely for the purpose of providing information about management's current expectations and plans relating to the future. We don't undertake or accept any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements to reflect any change in our expectations or any change in events, conditions, assumptions or circumstances on which any such statement is based, except as is required by law. We use terms as gross profit, gross margin, adjusted EBITDA, annualized revenue run rate and mostly recurring revenue on this conference call, which are non-IFRS and non-GAAP measures. For more information on how to define the terms, please refer to the definition set in the management discussion and analysis. And with that, let me turn the call over to Mr. Ali Tajskandar, Chairman and CEO.

Thank you very much, Angelica. Good day, everyone. We hope that you're all keeping safe and healthy. I truly appreciate everyone for joining us today. We are very pleased with our third quarter results, which proved to be the strongest quarter in the company's history. Wishpond achieved record revenue of $5.5 million in Q3 2022, representing approximately $22 million in annualized revenue run rate, driven by the company's continued focus on organic growth and successful integrations of its acquisitions. I'm especially proud of our team for the cash flow performance in the third quarter, with the company generating about $700,000 of positive cash flows from operations. As part of the cost reduction initiative launched in Q2 of this year to drive profitable growth, which one continue to scrutinize all new expenditures with the intent to optimize operations and achieve cost savings synergies. As a result, the company was able to achieve record positive cash flows from operations and record positive adjusted EBITDA in Q3. Wishpond has now achieved positive cash flows from operations for the second quarter in a row, a tremendous accomplishment allowing the business to further strengthen its balance sheet. Consequently, Wishpond can continue to invest in organic and inorganic growth initiatives without the need to raise additional capital. Our outlook continues to look promising for the fourth quarter and into 2023 with increasing sales, improving margins and positive cash flows. We continue to experience increasing demand for our products and have not witnessed any slowing down or negative impacts due to external macroeconomic conditions. Our outlook remains positive as we head into 2023 with increasing sales, positive adjusted EBITDA and positive cash flows. We expect to continue to grow rapidly as our sales pipeline remains robust, and we begin to introduce bundled solutions to our customers. I will provide additional details on our outlook later on the call. But first, I would like to turn it over to our CFO, David Pais, who will review the financial results -- the results for the third quarter. David?

Thank you, Ali. I'm pleased to report that we had very strong Q3 results for the 3 months ended September 30, 2022. Wish fan achieved record quarterly revenue for -- of $5.5 million during Q3 2022 compared to revenue of $4 million generated during Q3 2021, an increase of 38%. Revenue growth in Q3 2022 is attributable to the company's expanded sales team, new product introductions and acquisitions. Wishpond achieved gross profit of $3.6 million in Q3 2022 compared to $2.8 million during Q3 2021, representing an increase of 31%, driven by an increase in overall revenue. Wish pond's gross margin percentage in Q3 2022 was 66% compared to 69% in Q3 2021. The gross margins are within the company's historical average of 65% to 70%. The United States remains our largest and fastest-growing market, generating 68% of our total revenue in the quarter, with approximately 15% and 17% of revenue generated from Canada and Rest of World, respectively. During Q3 2022, Wishpond recorded positive adjusted EBITDA of $593,000 compared to an adjusted EBITDA of $204,000 in Q3 2021. The improvement is primarily driven by higher revenue and continued cost management initiatives and operational efficiencies initiated in the latter half of Q2 2022 that are expected to result in more than $1 million in annual cost savings. In Q3 2022, Wishpond generated net positive cash provided by operating activities of $671,000 compared to cash burn from operating activities of $134,000 in Q3 2021. I would now like to provide some additional commentary on our recent cost reduction and optimization initiatives, which resulted in record cash flow generation for the company. During the second quarter, the company implemented several cost reduction and operational efficiencies designed to conserve cash, which have resulted in the company realizing more than $1 million in annual cost savings. Some of the key cost-cutting initiatives were, we reduced the company's legal fees, professional fees and corporate development expenses. We implemented a hiring freeze in most areas of the company. We implemented a number of optimizations and workflow improvements that allowed us to maintain our sales and customer acquisition costs, while revenues grew. We implemented AI or artificial intelligence technologies to run certain campaigns, thereby eliminating manually labor-intensive processes and costs. We consolidated some of our subscription and software costs across all our acquisitions and also optimize our AWS and cloud storage costs. Our commitment to having a focused mindset and realizing cost efficiencies while still achieving growth is what permitted us to record to generate record cash flow and EBITDA in the third quarter. The company's financial success is predicated on increasing our revenue while running the business cost effectively. We continue to have a clean and healthy balance sheet. As of September 2022, the company Wishpond had $2.7 million in cash and short-term investments, and the company had no debt. Wish Fund has a $6 million secured revolving operating line of credit with National Bank of Canada's Technology and Innovation Banking Group, which remains undrawn as of today. In summary, Wishpond is in a very strong financial position with a healthy balance sheet, solid monthly recurring revenue and very good visibility on revenue and cash flow for the current year. Wishpond is able to continue to grow comfortably from its cash flow from operations without the need for any additional equity or debt capital waste. I will now provide an update on our normal course issuer bid or share buyback program. On June 15, 2022, the company announced the renewal of its normal course issuer bid, or NCIB, was approved by the exchange. During the third quarter of the company, the company purchased 22,500 common shares under the NCIB for aggregate consideration of $17,685. The Board of Directors of Wish Bond believes that the recent market prices of the company's common shares do not properly reflect the underlying value of such shares and that the purchase of the shares would be a desirable use of corporate funds in the best interest of the company and its shareholders. Hence, we will continue purchasing shares under the NCIB program in the coming months. This concludes my financial update, and I will turn the call back over to Ali.

Thank you very much, David. One correction. David mentioned this correctly, but on this slide, this has 12,000 common shares under an CIBs, as David mentioned, is 22,500. Thank you very much, David. Moving on to the next slide. Well, I would now like to share with you some recent business highlights. On July 12, 2022, the company announced the launch of our all-new website builder product that includes lead tracking and segmentation tools, personalization abilities, advanced forms and pop-ups, integration with Wishes e-mail marketing to referral marketing, calendar functionality, pop-ups and more. The website builders are expected to increase customer retention, reduce churn and increase customer satisfaction. On July 20, 2022, the company announced 3 new awards from Gartner, one of the world's most reputed platforms for business software reviews and research, which fund received the Get app category leaders award for content marketing, the software advice front runners award and was included in the Capterra shortlist for 2022. On October 3, 2022, the company announced that it had completed the integration of its recently acquired subsidiary Viral Loops, resulting in improved growth in the combined business due to greater cross-selling and bundling opportunities with larger deal sizes. The complete integration of Viral Loops with the Wishpond platform allows contacts and data to be synchronized between Viral Loops and Wish, enabling Wishpond customers to grow their business with referrals and wire lose customers to use Wish-Bone platform for their marketing activities. On November 2, 2022, the company announced that Lloyd Mobile had joined as Board of Directors as an independent director and member of the Audit Committee effective November 1, 2022. Lloyd has over 15 years of experience building technology products and companies from conception to scale. His deep experience in sales, marketing and scaling the business will be a valuable asset as we enter Wishpond next stage of growth. We welcome Lloyd to the Board and look forward to having him be part of Wishpond team. Which one's outlook for fourth quarter 2022 and heading into 2023 remains strong and resilient. The business has felt no impact due to recession, inflation, supply chain or other macroeconomic effects. Instead, the company's performance is better than ever and extremely positive across all of its acquisitions and the entire company as a whole. Respond continues to experience strong performance across all its businesses with robust demand for its products. Based on current MRR trends, monthly recurring revenue trends, we are very optimistic about the outlook for fourth quarter and for 2023. Based on our progress thus far in Q4, we expect the company will achieve record revenue, adjusted EBITDA and cash flows in fourth quarter. These positive results are driven by the increased size of the company sales team, positive contributions from its acquisitions, increased bundling of these products and services, new product-related revenues and favorable seasonal effects in the second half of the year. Wish pond expects to maintain a strong organic growth profile into next year as its revenue and earnings growth are projected to continue in 2023 with further integration of these acquisitions and an increase in cross-selling opportunities, new product launches and higher customer retention. Wishpond's objective heading into 2023 is to continue growing this business both organically and inorganically and to continue demonstrating a disciplined capital allocation strategy to maintain profitability and increases cash position while increasing sales. Wishpond has a robust sales pipeline and will look to drive revenue growth in 2023 by investing in the company's sales and marketing functions, cross-selling the company's products and services and introducing bundled packages of its product lines to new customers. One of the reasons for our organic revenue growth is the success of our plan sales team. Last year, we increased the size of our sales team from 12 to 24 account executives. This year, we are currently at 43 account executives, and we plan to have 45 account executives by year-end. The sales team's calendars are very booked for demos and no slowdown in sales activity so far in Q4. In line with the company's focus on profitable growth, Wishpond will continue to scrutinize all discretionary expenditures across the organization with the intent of optimizing operations and achieving cost savings synergies. The cash flows generated by the company will continue to be reinvested in the business and allocated in a disciplined manner, which may come in the form of future acquisitions, share repurchases or to accelerate organic growth. Wish and has a clean balance sheet and can continue to fund the growth of the sales team and new product launches from cash flows from operations without having to raise any additional equity or debt capital. Now an update on our acquisitions. We have successfully integrated all 5 of our acquisitions. We've created integrations between the different products across the acquired businesses, and we've implemented cross-selling capabilities. We've recently developed bundled pricing plans that bring the most value for our customers. Our development team is working hard to build additional integrations, single sign-on capability and single dashboard for all the products in one integrated platform. Going forward, we do not expect to be making acquisitions at the same pace that we have been doing in the past due to the current economic environment and the weakness in the capital markets. We do not -- we are not expecting to close any additional acquisitions this year in 2022. However, with a strengthening balance sheet and improving cash flows, we anticipate the possibility of making additional acquisitions in the next year. We continue to remain in contact with several potential targets and receive new inbound acquisition opportunities on a regular basis. Wishpond is an elite software company with profitable growth. Technology companies are known to burn lots of cash for many years before becoming cash flow positive. Very rarely do you find a software company of our size, a $22 million in annualized revenue run rate that is generating positive cash flow from operations is also rapidly growing with a 30% to 40% organic growth and maintain gross margins of over 65%. Wishpond truly is a unique, high-growth profitable company, and we remain committed to delivering profitable growth in the future. Which has the most complete and comprehensive integrated marketing platform available for small and medium-sized businesses. Our customers benefit from the range of online marketing options that we provide under one roof. We have a solution that is unique, integrated and cost effective, making it more appealing to small businesses than ever before. Instead of having anywhere between 3 to 6 different marketing-related point solutions, small medium-sized businesses would rather have just one solution from Wishpond. Wishpond is also recession-resilient. In an economic slowdown, companies often reduce or freeze their budgets under in-house marketing and sales staff or on individual fragmented marketing solutions. However, they still need to acquire new clients to keep their business afloat. And so businesses looking to cut costs, find value in Wishpond in one consolidated software platform, which costs a fraction of all the individual products it would replace. Furthermore, businesses keeping a close eye on their costs or looking to cut costs, find which one has a much cheaper alternative to an internal marketing person, which one is an effective low-cost alternative that is striving in a recessionary environment. Response products are essential to SMBs. All small, medium-sized businesses, including e-commerce, business-to-business and bricks-and-mortar businesses need to have a digital marketing strategy to attract, nurture and retain customers. The success we are achieving indicates that our products and services are valuable tools for our customers who rely on which one to generate leads and increase their sales, especially when operating in this uncertain business climate. Wishpond has a diverse customer base of more than 4,000 businesses. Wishpond has very little concentration or financial dependence in any one industry. We serve a wide variety of industries, which provides us with the ability to shift focus quickly if market conditions adversely affect any specific industries. Wishpond remains a low-cost culture at -- Wishpond maintains a low-cost culture, which one embraces a low-cost organizational structure with a virtual head office and a remote team, which allows us to operate with lower overhead costs. We are scrutinizing all discretionary expenditures across the organization with the intent of optimizing operations, achieving cost savings synergies and remaining cash flow positive. Before closing, I would like to comment on the recent decline in the share price. Next month, we'll mark our second anniversary as a public company. Since listing in December of 2020, we've achieved numerous milestones and growth that we are very proud of. For instance, Wishpond more than doubled this customer count from 1,700 at the time of going public to over 4,000 customers today. We increased our revenue from $7.9 million in 2020 to our current $22 million revenue run rate. We completed 5 acquisitions over the past 2 years, and now the company is generating record cash flows. As everyone on the call is aware, our share price has experienced a decline since the beginning of the year. We do not believe this drop in our share price is warranted, given our fundamentals remain extremely strong, and we are very positive on our future outlook. We believe the general poor capital market conditions are the primary cause for the weakening in our share price, and small-cap tech stocks have suffered the worst in this market correction. We believe that Wishpond remains well positioned for continued growth with increasing revenue and improving cash flows in Q4 and into 2023. Despite the current challenging business environment with high inflation, increasing interest rates and recessionary concerns thus far, we have not noticed any slowing down in the demand for our products. Our sales pipeline remains robust, and our revenue growth shows tremendous resilience despite the current uncertain economic conditions. In closing, I want to thank all the employees of Wishpond whose hard work continues to elevate the company to higher levels. We want to thank our customers who rely on us to help them with their digital marketing needs. Also, I'd like to thank you all for joining us on this call today. We look forward to providing you with another update next quarter. Thank you. I will now hand it back to Angelica for questions.

Thank you, Ali. With that, we will now open the question -- the call to questions. Just a reminder that questions will be limited to analysts only. And with that, we're going to have the first question from Chris Thompson of PI Financial.

Great. Thanks. David. Ali. Congratulations on a strong quarter. That's a 2-part question, if you don't mind. My first one is just -- it sounds like you're pretty excited with the visibility and just help us kind of gauge what's behind that? Can you talk about the trend of your revenue mix in Q3 in terms of self-serve revenue versus fully managed revenue and how that kind of compares to Q2?

Yes. Chris, thank you very much. Good question. So the reason we're very positive about our outlook is that, obviously, we are already halfway into Q4. And we can see the demand for our products, we can see the health of our pipeline in terms of the demos that people are booking with our sales personnel. And it remains very strong. Our outbound team is doing extremely well. In terms of the mix between self-serve and fully managed, it remains mostly consistent with what we've seen in Q2, now heading into the future. And next year, as we roll out more of the bundled packaging, all-in-one software platform. That will gradually start to shift towards higher-margin packages as well. David, if there's anything you want to add to that?

No, Ali, I can kind of agree with everything you've said, Chris. I think the business is just doing well overall. Both sides of the business are growing, and I think it's going to go the same way in the next quarter as well.

Okay. Fair enough. And just, again, in Q4, are you guys seeing an increase in demand for the self-serve solutions? I remember last year, the holiday period was really strong, and then we had a sequentially lower Q1 because Q4 was so strong, you've seen that same trend this year. And just looking at consensus, the quarter-over-quarter growth is looking for 17%, which is a little bit higher than this year or this quarter, which is up 10%. So I just want to get a handle if you're comfortable with that outlook.

I'll try to answer that. I mean what we have most visibility over is the organic growth based on our opt-in sales and everything else. The effect of seasonality, some of it is harder for us to predict up until the end of the holiday season towards the end of December. It is harder to predict that I'm not entirely sure if the positive seasonal effect will be as great as it was last year. So we are more counting on our normal organic growth quarter-over-quarter, that is going to be very solid. But whether there will be any positive surprises that will make Q4 have as big of a jump as we had last year, it's harder to tell. But the other thing that I would also add is that the company, we made an acquisition, for example, Wishpond doesn't have the same seasonal effects, so going into Q1, we expect to have less seasonal negative effect than we did last year. Overall, my expectation is, and David, please correct me if you see differently, but my expectation is smoother Q4 and Q1 numbers than the very high Q4 of last year and the very low Q1 of this year that we experienced. Anything you want to add to it?

No, Ian. I agree like internally, what we're projecting is somewhat flat Q1, definitely no growth in Q1 but flat Q1, not so much negative down trend as we saw in Q1 of 2022. That's right.

The next question is from Neehal Upadhyaya of AI Capital Markets.

Congrats on the strong quarter. So what are some of the growth levers that we can expect to wish to pull beyond M&A? And then including M&A, what does the next target look like for you? Is it more about acquiring tech that you currently don't have in your solution suite? Or are you looking more on acquiring a larger customer base?

So I'll start with the first part of that question. In terms of levers for growth, it is similar to what we've had before, not as much on the acquisition side. But on the organic side, our outbound sales engine is a substantial part of our revenue growth -- and that's what we were talking about that last year, we grew from 12 salespeople to 24. And this year from the 24, we're heading towards 45% by end of the year. And as we add more sales people on the team, the organic growth continues quite strongly. And similar to that, we're investing in our inbound marketing and demand generation as well. Those are 2 of the major points and increasingly with the bundled packages that we're creating, where it is including all the companies we acquired under one umbrella we are able to charge higher self-serve prices and have stickier product offering and that increasingly improves churn and increasingly makes it easier to grow even faster. So I would say those are some of the top ones that I would mention. The second part of your question was related to acquisitions. If you look at the past 5 acquisitions that we did, I think it paints a pretty good picture of what we would look for. We want to have a margin of safety. What that means is that we want it all actually. We want companies that are profitable, that are recurring revenue businesses that do fit and fill certain product gaps that we have that we wouldn't overpay for them. And financially, they would be good investments. So we want the strategic value as well as financial. Now at the same time, we're opportunistic. So if we come across certain opportunities that maybe it has less of the strategic value, but a lot of customers and the cash flow is great, then we'll look into that. It's really a case-by-case situation. But I think the criteria that I've mentioned probably is more or less what we're going to continue operating with into the future.

Perfect. And then maybe just one last one for me in terms of gross margins, how do you see that profile playing out over the next year? And what range do you think you can get that to in the long term, especially considering the focus on providing additional managed services over sell services.

David, do you want to take that one?

So over like over the next few years, like as revenue gets to much higher levels, we expect a breakout of that 65% to 70% gross margin band. In the near future, like we're already at $20 million, $22 million annualized revenue run rate, next milestone that's soon looming as the $25 million revenue run rate and $30 million in Solan. So I guess what we see in the next couple of quarters is to stay within that band. But in the longer run, just because of the economies of scale and so on. And the way we actually want to move the business towards people using our bundled services, and we can actually realize higher price points as we get to selling bundled packages, we expect the revenue of the gross margin to improve at that point.

Yes. Perfect. I'll pass the line. And again, congrats on the solid quarter.

The next question is Daniel Rosenberg of Paradigm Capital.

Thanks for taking my questions. My first question is a continuation on that M&A theme. I was wondering if you've seen valuations change and the dialogues that you're having in the market? And then secondly to that, just given where the share prices are, have your thoughts around use of capital change because it's just quite accretive to buy your own shares rather than another company. So any color there would be appreciated.

Yes, Daniel, good questions. There are multiple elements in that. I'll try to touch on them. And David, please add anything if I missed them. In the private markets, we do see some of the expectations have been lowered. But I would say not to the same extent that we've experienced in the public markets. And that creates a bit of a gap between the expectations in the private market in terms of acquisition opportunities and ourselves. And our stock price is not trading at a multiple right now that would make it easy for us to have accretive acquisition opportunities. And that's part of the reason that we're holding off right now. I think no one really knows when the market will turn around when it does and the stock price corrects itself, then it will be easier to go back, potentially even raise some money for the purpose of acquisitions and make more of those acquisitions. Currently, with the current stock price, those larger acquisitions would be harder to justify for sure. And in terms of share buybacks, yes, it's definitely something that it is available and top of mind for us. We're not in a hurry to buy back a substantial number of our own shares right now. I think more than anything the market has to correct itself, and we're more than happy to reinvest in the growth of the company. But in the future, there could come a time where we're producing so much cash flow that just makes sense to do a more aggressive buyback.

Yes, I would agree with everything Ali said. If I can emphasize a couple of things, just looking at our history, the 5 acquisitions we did since we went public. I think it's important to emphasize wish funds been extremely disciplined. It was not any one thing that made us do an acquisition. We actually had to check a number of different boxes being accretive being one, obviously, we wanted product. We wanted EBITDA positive. We wanted a company to come in an established revenue stream and customer base and all that stuff. So it was not easy to close to find those deals, but we did, right? Right now, even though we're not actively looking, we still get a lot of inbound companies that come in or we have a network that sends us leads. And we're finding a little less of those opportunities to check all the boxes. But obviously, if we do find them and we really get excited about them, we might come back to the market and say, this is something that we might want to raise capital on or whatever. But having said that, there's nothing on -- right now in the ratemaking us do that. But we are looking, but we're being very, very disciplined. And in regards to whether we spend the money on NCIB, I mean, my opinion is that we're still a growth stage software company. So we'd rather just invest in growth rather than our stock. So yes, we are buying back stock. But at the same time, our growth is very, very important as well.

Thanks for that. My next question is around the sales force. It's nice to see you guys kind of -- you're doing more with less in this quarter. So I was just wondering if you could comment around the sales strategy, how you're organizing things, and you mentioned a bundled product offering. Does that change how the sales force is trained? Is it by the customer base? Is it by the product base? And then if you're offering a suite of solutions, how would that work?

I think the sum of those questions require at least an hour discussion. Very good questions. I'll try to answer the best I can. So we are definitely trying to do more with less. So that goes across the board. In terms of lead generation, for example, in Q2, one of the things that we did was a lot of automation, use of artificial intelligence and generating the leads and generating the personalization and everything that we need and that resulted in a lot of cost savings as well as improved performance. In our sales development team or some companies called BDR team, where they're booking the demos with our salespeople. We've also brought a lot of optimizations and helped our STRs be more empowered and one of them to be able to do as much as maybe 1.5 or 2 in the past used to and not have to constantly add more headcount to that a lot of automation, a lot of optimizations that we've done there. In terms of our sales resources also, we are very actively right now working on improving closing rates that they have beyond the historic numbers that we've seen so that one account executive one salesperson can do as much as maybe 20%, 30% more account executives so that they themselves benefit from that, obviously, as they bring more, but the company also benefits and we don't have to have as many kind of executors and the base salary savings would be there as well. So some of those are the things we're doing. In terms of the bundled packages, one of the initiatives that we've been working on and now we have enough traction actually on -- we're going to release some more information about soon, actually. But high level of it is -- we're creating this -- we have created this bundled offering of, you can call it, Wishpond smart market in cloud or all in one package, where it is all the software packages that we've acquired. So Wishbone Lopes, versus IQ, win back and so forth. So that when a client comes to us, we can say, listen, your website will run on Wishpond, anyone who wants to book an appointment with you the calendar functionalities using Wishpond, the e-mails that are going to them, newsletters, all of those are through Wishpond pop-ups and forms are through Wishpond. If someone leaves without making it purchased, FMS marketing that goes to them shop attainment on you want to get more referrals to the customers that you already have that referral marketing is to Wishpond loops. And we set all of that up as part of the onboarding in the first month and then the whole system, your whole growth engine when is set up, then pass it on to you and train you so that you can continue with it. And that's more of a self-serve offering, and that is going to be more of the future of our sales team. And price points are going to be comparable to our fully managed, but the margins are going to be greater, and the stickiness would be greater. So the way currently, we're thinking about structuring that and we've done that has been a mix of some of our salespeople will continue to sell the packages that we've sold in the past. And some of the newer additions to the team would be trained on this bundled offering. And so far, it's looking very, very promising.

Thanks for that detail, and congrats on a good quarter and a tough macro. I'll pass the line.

Thank you very much, Daniel. I appreciate it.

The next question is from Neil Bakshi of Canaccord. Please go ahead.

Thanks for taking my question and congratulations on the quarter. The first question, just building off of the discussion around the sales team, I guess, given these investments in kind of optimization and training and using AI, has there been any change in the expectation around kind of future hiring cadence looking into 2023 above or below kind of where it was before?

Currently, our expectation is to go from the 45 or so salespeople that we will have by the end of the year to 60 to 70 by end of next year. Now as we continue to optimize, we'll see where we end. But currently, that's where we expect to land.

Okay. Very good. And then just a question with regards to -- you mentioned before the Viral Loops acquisition has helped -- has smoothen out some of the top line profile. Just wondering then looking at conversion down to cash flow from operations and free cash flow conversion, should we expect looking into early next year, if there's not necessarily a big step down on a sequential basis in revenue, should cash flow generation be pretty kind of stable? Or how should we be looking at that kind of conversion to free cash flow next year?

Is your question mostly around kind of adjusted EBITDA margins, those kind of things?

Yes, we can look at just EBITDA margin. Just like is it -- are we seeing the earnings profile smoothing out commensurate to how the top line seems to be smoothing out a bit?

David, you might want to take a stab at that first.

Yes. I mean at a fairly constant revenue base. So there's a couple of different ways I can answer that question, Neil. So obviously, we are planning to grow, right? So like Ali did mention that we are -- we raised a number of AEs from the beginning of the year to today. In fact, between Q3 and Q4, month-to-date quarter-to-date, Q4, we've already added some headcount in our AE component. So if you go into Q1, I can foresee that we're probably going to keep adding some AEs, I think it might be safe to say that. So maybe if you're saying that if revenue doesn't keep up, will that impact our bottom line, Yes, perhaps.

Well, I think the question was more if revenue is going to be less choppy quarter-to-quarter, is profit all going to be more smooth as well?

Yes. I mean I think that would be safe to say that as the revenue line smooths out and if we kind of -- we've always kind of matched. We walked that fine line matching cost or additional cost based on the revenue growth and the forecasted revenue growth. So long as we see revenue at a certain line, we're not going to overstep or we'll be very, very careful to overstep. And so we kind of see that bottom line is moving as well.

Yes. And I think, Neil, the guiding philosophy that we're operating with is we want to have profitable growth. So going into the future, I think the profits that you saw for this quarter and cash flow positive from operations last quarter are not one-offs, but they're more of part of our disciplined approach going forward as well. Now will it be for example, this month was -- this quarter, it was 10% adjusted EBITDA margins. Is it going to grow or not? I think you're going to see some up and down, maybe around 5% to 10%. And long term, we want to get that to above 20%. And I think based on the performance you saw in Q3, it is easy to envision that even that 20% adjusted EBITDA margin, it is within our reach. But as David said, we are walking that fine line between growth and profits. So we want to grow profitably, but invest in the growth of the company. So probably around that 5% to 10% would be where we would be looking at.

Okay. I really appreciate that color. Just one quick question just about the customer mix. E-commerce, B2B kind of the split. Just wondering if there's been any kind of changes in the last few months as part of the outbound sales. Any impact on that mix more towards B2B?

It has been mostly similar to Q2. It hasn't really substantially changed.

Okay. Thank you.

Okay. The next question is from Gabriel Leung from Beacon Securities. Please go ahead.

Hi guys. Thanks for taking my questions. Just a couple of things. First, a question of clarification. Ali, did you say in terms of organic growth, you're sort of targeting 20% to 30%? Was it 30% to 40%. I just missed that.

30% to 40%.

Got you. And as it relates to... The additional sales reps you plan to hire over the -- I guess over the coming year, I guess, let's call it leverage about 20 additional sales reps. You did a similar sort of strategy this past year, and it led to sort of negative EBITDA contribution in the first half of calendar '22. So would you anticipate maybe going back to a negative EBITDA position in the first half of next year as you ramp up these sales reps?

We're not planning for that to happen. We're planning for each quarter to remain profitable and positive. It might shrink a little bit and then expand. But currently, barring anything unforeseen, we don't anticipate that there would be a bigger investment in sales growth in the first half and less in the second half, we expect it to be a smoother addition to the team.

Got you. And maybe one more question on the sales team. I appreciate that they're being offered more products to sell now, and it takes time for reps to get up to ramp up. But I'm curious, with some of your more mature, I guess, sales reps, guys who've been with you longer, are you able to quantify what's the revenue expansion been like? I mean, just in terms of -- on an annualized basis, how much more revenues are they able to bring into Wishpond versus when they first started? I'm just trying to think of trying to take operating leverage amongst the sales group.

David, do you have anything on that? I definitely know anecdotally that the salesperson that starts now after 3 months is fully ramped up, but there's a big difference between their performance and closing rates. And one of the things that we track internally is average value of estimated between that person that is just 3 months into the role and 1 year or 2 years into the role, there's a difference. There's a big difference. But I don't know if we want to quantify that per say.

I agree with what you're saying. I think the only thing I would add to that is irrespective whether they're new or even if they're more experienced. There still is some month-to-month variability, perhaps some close rates on the average dollar volume of feed sale and stuff like that. So even an experienced sales guy may go -- may have their ability up and down. And the new one is a little bit lower, obviously, in average revenue per month, but is that same variability. And you guys, we've been surprised with you guys having great months as well. Yes.

Got you. Maybe I can ask another way, could I say that someone that's been here a little longer and has all the tools at the belts, are they able to double the revenue generation? Or is that too aggressive way of thinking about it?

I would say that might be a little bit too aggressive, probably 30%, 40%, 50% more in their ability to generate revenue would be more in line, I would say. Got you. Sell... But if you want to use that to update your models, keep it more conservative.

Got you. I appreciate it that, that's it for me.

Thank you. And the last question is from Christian Sgro of 8 Capital. Go ahead.

Good afternoon Ali and David and thanks for taking my questions. The first one, it's similar to Neil's question. He asked on strength by verticals. But maybe what I want to ask is across your customers, are you seeing the size of customers change at all? And are the average contract values being you changing maybe moving up with newer bundled offerings. How do you see the size of customers and the contract size is changing?

I think we see 2 trends. One trend that we see is B2B businesses generally have higher average revenue per month and LTV. And especially Persis IQ does more selling to B2B customer base. So that has been one trend that is going on, and we're going to invest more in that in the coming years. So there's going to be more push towards B2B businesses. And generally, they are more established businesses compared to some of the business to consumer or e-commerce kind of players. So there will be some push towards that. And then the bundled offering, it is less of increase in monthly average revenue that they would pay us and more of an increase in long-term value. So the LTV would be what we expect to be substantially higher because of increased stickiness and also the margins are going to be greater because there's more of a self-serve element to it.

That's helpful. And then I'll follow on there with your comments on station retention. Are you seeing contract lengths increasing? Are you -- are there ways to get customers to subscribe to a 1-year minimum as opposed to a month on -- does anything change that way? Or is the sales approach evolving that way with the length of the contract?

We have been pushing more towards successfully towards annual contracts, and that is more or less the norm that we have right now for majority of the cases in the bundled offering, it is pretty much kind of required to go with annual contracts. And it's working quite well. We're not really getting any substantial objection to it either.

That's all helpful. It was just those 2 questions from me. Thank you very much.

Thank you, Chris.

There are no further questions. I'll pass the call back to Ali Tajskandar for closing remarks.

Thank you very much. Angelica. So I think in closing, I want to just thank everyone for being here. Really appreciate your time. The capital markets have been very supportive of us. The team has done a tremendous job, and we're going to continue executing in a disciplined, responsible fashion with aiming to do that 30%, 40% organic growth going into the future and do that profitably and our balance sheet is strong. And there's tremendous opportunity in the market in terms of the size of the audience and millions of small businesses that we can serve. We have a profitable way of reaching them and a strong solution that is really the best in class for small businesses that we cannot wait to put in the hands of our customers. So we're going to continue on that and we're very appreciative of the support that all of you here on the call as well as the markets have provided us. Thank you, and stay healthy and safe. Take care.